Ecommerce sales have been consistently growing over the recent years but saw a massive spike since the onset of the pandemic. Many well-known brick-and-mortar stores have been forced to shut down either temporarily or permanently, with many shifting their entire operations online to save on costs.
Some opportunistic entrepreneurs took advantage of this shift in shopping trends to create brands that sell only on e-commerce platforms. Most notably, Amazon has been a platform that has attracted flocks of sellers for many reasons (which we’ll dive into later).
To learn about why e-commerce is here to stay, and why many are choosing to sell on Amazon, keep reading…
First, some e-commerce statistics…
It’s expected that the global e-commerce market will total $5.55 trillion in 2022. This number is estimated to continue growing, signaling that the domination of e-commerce won’t be changing anytime soon. The ecommerce market share has grown by 17.9% since two years ago, with an expected 21% of all sales in 2022 coming from online purchases.
Why is this happening? We can look at a few different factors to explain this change…
Supply chain management
A major impact that the COVID-19 pandemic has had on our economy was the disruption in supply chain management processes. For as long as we’ve known, the core pillars of supply chain management were globalization, low-cost supply, and minimal inventory.
When the COVID-19 virus broke out and disrupted these pillars, many companies shifted their focus to re-organizing and changing their systems, and for some, that meant moving away from the physical retail sector.
There’s no doubt that the convenience of ecommerce is unparalleled for both sellers and buyers. On the seller side, the time and cost savings of not having to purchase and manage a physical storefront are very attractive and remove the traditionally high barrier to entry when it comes to selling.
On the buyer side, not having to leave the house and browse through dozens of aisles to pick items is a major perk of online shopping. Buyers can make orders at any time of the day, avoid traffic, and compare prices and options all from the comfort of their homes.
Location and growth
With ecommerce, you can sell from your location to nearly all countries. This provides a huge opportunity to expand a smaller brick-and-mortar store, or even to build a brand from scratch solely through ecommerce channels. The growth opportunity with ecommerce is enough for many brands to shift their focus to selling online.
No more spending thousands on rent, retail staff, and other unnecessary overhead costs. Selling on ecommerce has lower barriers to entry and generally costs less than physical retailing. You also have much more control over your costs when selling online.
When selling online, inventory is stored in a central warehouse, which is much cheaper than storing in retail spaces that are notorious for charging hefty fees.
It’s rare to be watching TV and come across an advertisement that actually appeals to you. This is because traditional forms of marketing focus on selling generalized products to mass markets. With digital marketing becoming more commonly used to sell more niche or branded products, naturally, ecommerce stores are winning in this arena since digital advertising typically drives traffic to a website.
Digital marketing is more targeted, has a wider reach, and is more impactful than radio commercials, newspapers, etc, and brands are well aware of this. To reap these benefits, brick-and-mortar stores are joining the bandwagon and focusing their attention to e-commerce.
Now that we’ve looked at some common reasons as to why e-commerce is dominating sales, let’s see why Amazon continues to grow, and why many are choosing to sell on their platform…
With over 2.45 billion monthly visits in the United States alone, an annual revenue of $469.822 billion in 2021, and 1.9 million active sellers in 2021, Amazon is no doubt a major leader in the world of e-commerce. It’s clear why shoppers are choosing to buy from Amazon, but let’s take a look at the seller’s side…
Why are sellers choosing Amazon?
Established brand and reputation
When you sell on Amazon, you benefit from their already established household name and stellar reputation. From their renowned customer service to their thousands of options, buyers know that they can rely on buying from Amazon without worrying that they’ll be unsatisfied with their experience.
Amazon also enforces many rules to vet sellers and ensure that buyers feel safe when shopping with them. When you sell on Amazon, you increase your trust and help to minimize the skepticism that some buyers might feel when online shopping, which is sometimes half the battle.
As of 2021, there are an estimated 147 million Amazon Prime members in the United States alone. These members shop regularly from Amazon due to their branding, and most notably, the 2-day shipping option.
With Fulfillment by Amazon (FBA), you can send your inventory to their warehouse where they handle the picking, packing, and shipping of your products to customers. Many sellers understand the value of partnering with Amazon as it greatly reduces costs and efforts in the long run.
How to stand out?
Ok…so we’ve seen that with the millions of sellers and buyers on Amazon, there’s a clear demand for online shopping in all sorts of niches. But a valid concern that many established sellers have is competition. They’re worried about launching new products and not seeing success. Now yes, the competition can be fierce, but there are ways to stand out, like…
Branding and content
Many Amazon sellers don’t quite understand branding. They simply take their manufacturer’s photos and re-post them without putting in additional effort. To stand out from other sellers, you can arrange a video production session to get a high-quality demonstration of your product in action.
When you start treating selling on Amazon as if it were your own website, that’s when you’ll see interesting results and come across as a real brand and not just a generic seller.